HR BLOCK Final EXAM LATEST
QUESTIONS
-exam elaborations with 100% verified answer/solutions-
Excel & Succeed - academic year (2026-2027)
161 Q&A
What is the difference between earned income and unearned income?
Earned income is received for services performed. Some examples of earned
income include wages, commissions, tips, farming, and other business
income.
Unearned income is taxable income that does not meet the definition of
earned income. Examples of unearned income include interest income,
dividends, rents and royalties, pensions, alimony, and unemployment income.
If an employee thinks their Form W-2 is incorrect, what should they do?
If the taxpayer's name, social security number, earnings, or withholdings are
incorrect, the taxpayer should notify their employer and request a corrected
Form W-2. The employee should request that the employer update their
records and verify that the earnings were properly credited with the Social
Security Administration. However, the taxpayer is still responsible for filing a
timely tax return. If the employee's attempts to obtain a corrected Form W-2
from their employer are not successful, the taxpayer should notify the IRS. It
may be necessary to prepare a substitute Form W-2.
Is interest received on U.S. Treasury obligations taxable on state and/or
local returns?
No. Interest on U.S. Treasury obligations is exempt from state and local tax by
federal law.
,Is municipal bond interest taxable on a federal return
No, the federal government does not tax municipal bond interest.
How is interest income reported to the taxpayer?
Interest income is reported to the taxpayer on Form 1099-INT or a substitute
statement.
What information do you need to know to determine whether a
nondependent taxpayer is required to file a return?
The taxpayer's filing status, age at the end of the tax year, and gross income
for the year.
For tax purposes, when is a person's marital status determined?
On the last day of the tax year, or the date of death.
How much is added to the standard deduction if the taxpayer (or
spouse) is age 65 or older, or blind?
$1,350 for married taxpayers and qualifying widow(er)s, or $1,700 for those
filing single or head of household.
What is the personal exemption amount for 2021
There is no personal exemption for 2021. A personal exemption was an
amount previously allowed by law to reduce income that would otherwise be
taxed. The Tax Cuts and Jobs Act of 2017 repealed this deduction beginning
in 2018.
How is the gross income filing requirement determined for most
nondependent taxpayers
The taxpayer's standard deduction, including the additional amounts for age.
However, for married filing separately, or married filing jointly when the
spouses did not live together at the end of the year, the amount is $5.
What is the difference between injured spouse allocation and innocent
spouse relief?
The IRS provides an injured spouse allocation for the taxpayer to protect their
portion of a refund from a spouse's past-due federal income tax, unpaid
student loans, unpaid child and spousal support, or state income tax.
,The IRS provides innocent spouse relief to taxpayers who file a joint return
and later learn that their spouse has underestimated income (or overstated a
credit or deduction) on the return.
Is unemployment compensation taxable?
Yes, unemployment compensation is fully taxable.
Are scholarships and fellowships taxable?
Sometimes. Generally, scholarships and fellowships are excluded from
income by degree-seeking candidates to the extent that they are used to pay
qualified education expenses, such as tuition and course-related fees.
However, if they are used to pay for room and board or other expenses, they
are taxable.
What document will the taxpayer receive from their employer reporting
disability pension payments?
The income is reported on Form 1099-R
Under what circumstances can a disability pension qualify as earned
income for the EIC?
Disability pension income received before the taxpayer attains minimum
retirement age for their company is reported as wage income. It is also
considered earned income for purposes of EIC.
What types of income must be reported on Schedule 1 (Form 1040) and
then reported on Form 1040?
Gambling winnings, alimony, jury duty pay, canceled debts, and hobby income
are some examples of income that must be reported on Schedule 1 (Form
1040) and then reported on Form 1040.
What are the adjustments that can be claimed on Schedule 1 (Form
1040)?
Some examples of adjustments that can be claimed on Schedule 1 are:
Educator expense deduction.
The health savings account (HSA) deduction.
Moving expenses for members of the military.
, Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty on early withdrawal of savings.
Alimony payments.
IRA deduction.
Student loan interest deduction.
How much may an eligible educator deduct for qualified classroom
expenses as an adjustment to income?
Up to $250 per eligible educator.
Married taxpayers filing a joint return who are both eligible educators may
each claim the $250 deduction, totaling $500.
Who is an eligible educator?
Someone who worked at least 900 hours during the school year as a teacher,
teacher's aide, counselor, or principal in an elementary or secondary school.
Where is the educator expense deduction reported
Educator expenses are reported on Schedule 1, Additional Income and
Adjustments to Income, line 11.
Who may not claim a student loan interest deduction?
Someone who is claimed as a dependent may not claim the deduction in the
current tax year, nor may someone who uses the married filing separately
filing status. The amount of income a taxpayer earns may also affect their
deduction. Taxpayers whose modified AGI exceeds a threshold amount for
their filing status may not be able to claim the deduction, or they may only be
eligible to claim a reduced amount.
What is a qualified student loan?
A loan used to pay qualified education expenses. Credit card debt may be
included, provided the card was used exclusively to pay for qualified
expenses. Money borrowed from a related person is not a qualified student
loan.
What three requirements must be met for an individual to be claimed as
either a qualifying child or a qualifying relative?
QUESTIONS
-exam elaborations with 100% verified answer/solutions-
Excel & Succeed - academic year (2026-2027)
161 Q&A
What is the difference between earned income and unearned income?
Earned income is received for services performed. Some examples of earned
income include wages, commissions, tips, farming, and other business
income.
Unearned income is taxable income that does not meet the definition of
earned income. Examples of unearned income include interest income,
dividends, rents and royalties, pensions, alimony, and unemployment income.
If an employee thinks their Form W-2 is incorrect, what should they do?
If the taxpayer's name, social security number, earnings, or withholdings are
incorrect, the taxpayer should notify their employer and request a corrected
Form W-2. The employee should request that the employer update their
records and verify that the earnings were properly credited with the Social
Security Administration. However, the taxpayer is still responsible for filing a
timely tax return. If the employee's attempts to obtain a corrected Form W-2
from their employer are not successful, the taxpayer should notify the IRS. It
may be necessary to prepare a substitute Form W-2.
Is interest received on U.S. Treasury obligations taxable on state and/or
local returns?
No. Interest on U.S. Treasury obligations is exempt from state and local tax by
federal law.
,Is municipal bond interest taxable on a federal return
No, the federal government does not tax municipal bond interest.
How is interest income reported to the taxpayer?
Interest income is reported to the taxpayer on Form 1099-INT or a substitute
statement.
What information do you need to know to determine whether a
nondependent taxpayer is required to file a return?
The taxpayer's filing status, age at the end of the tax year, and gross income
for the year.
For tax purposes, when is a person's marital status determined?
On the last day of the tax year, or the date of death.
How much is added to the standard deduction if the taxpayer (or
spouse) is age 65 or older, or blind?
$1,350 for married taxpayers and qualifying widow(er)s, or $1,700 for those
filing single or head of household.
What is the personal exemption amount for 2021
There is no personal exemption for 2021. A personal exemption was an
amount previously allowed by law to reduce income that would otherwise be
taxed. The Tax Cuts and Jobs Act of 2017 repealed this deduction beginning
in 2018.
How is the gross income filing requirement determined for most
nondependent taxpayers
The taxpayer's standard deduction, including the additional amounts for age.
However, for married filing separately, or married filing jointly when the
spouses did not live together at the end of the year, the amount is $5.
What is the difference between injured spouse allocation and innocent
spouse relief?
The IRS provides an injured spouse allocation for the taxpayer to protect their
portion of a refund from a spouse's past-due federal income tax, unpaid
student loans, unpaid child and spousal support, or state income tax.
,The IRS provides innocent spouse relief to taxpayers who file a joint return
and later learn that their spouse has underestimated income (or overstated a
credit or deduction) on the return.
Is unemployment compensation taxable?
Yes, unemployment compensation is fully taxable.
Are scholarships and fellowships taxable?
Sometimes. Generally, scholarships and fellowships are excluded from
income by degree-seeking candidates to the extent that they are used to pay
qualified education expenses, such as tuition and course-related fees.
However, if they are used to pay for room and board or other expenses, they
are taxable.
What document will the taxpayer receive from their employer reporting
disability pension payments?
The income is reported on Form 1099-R
Under what circumstances can a disability pension qualify as earned
income for the EIC?
Disability pension income received before the taxpayer attains minimum
retirement age for their company is reported as wage income. It is also
considered earned income for purposes of EIC.
What types of income must be reported on Schedule 1 (Form 1040) and
then reported on Form 1040?
Gambling winnings, alimony, jury duty pay, canceled debts, and hobby income
are some examples of income that must be reported on Schedule 1 (Form
1040) and then reported on Form 1040.
What are the adjustments that can be claimed on Schedule 1 (Form
1040)?
Some examples of adjustments that can be claimed on Schedule 1 are:
Educator expense deduction.
The health savings account (HSA) deduction.
Moving expenses for members of the military.
, Self-employment tax deduction.
Self-employed health insurance deduction.
Penalty on early withdrawal of savings.
Alimony payments.
IRA deduction.
Student loan interest deduction.
How much may an eligible educator deduct for qualified classroom
expenses as an adjustment to income?
Up to $250 per eligible educator.
Married taxpayers filing a joint return who are both eligible educators may
each claim the $250 deduction, totaling $500.
Who is an eligible educator?
Someone who worked at least 900 hours during the school year as a teacher,
teacher's aide, counselor, or principal in an elementary or secondary school.
Where is the educator expense deduction reported
Educator expenses are reported on Schedule 1, Additional Income and
Adjustments to Income, line 11.
Who may not claim a student loan interest deduction?
Someone who is claimed as a dependent may not claim the deduction in the
current tax year, nor may someone who uses the married filing separately
filing status. The amount of income a taxpayer earns may also affect their
deduction. Taxpayers whose modified AGI exceeds a threshold amount for
their filing status may not be able to claim the deduction, or they may only be
eligible to claim a reduced amount.
What is a qualified student loan?
A loan used to pay qualified education expenses. Credit card debt may be
included, provided the card was used exclusively to pay for qualified
expenses. Money borrowed from a related person is not a qualified student
loan.
What three requirements must be met for an individual to be claimed as
either a qualifying child or a qualifying relative?
